RBI Scrutinizes Gold Loan Norms To Tighten Grip

The Reserve Bank of India (RBI) has intensified scrutiny over Non-Banking Financial Companies (NBFCs) regarding gold loan regulations. This move, particularly targeting IIFL Finance, comes after violations such as overvaluing collateral and ignoring loan-to-value (LTV) ratios. RBI mandates that gold loans should not exceed 75% of the gold's value, cash disbursements above ₹20,000 must be via bank transfer, and repossessed gold must be auctioned transparently. These measures aim to stabilize the sector, ensuring cautious growth and protecting borrowers, albeit increasing compliance costs and operational challenges for NBFCs.